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Finance

Daniel Kreisman, Matthew P. Steinberg.

We leverage an obscure set of rules in Texas’s school funding formula granting some districts additional revenue as a function of size and sparsity. We use variation from kinks and discontinuities in this formula to ask how districts spend additional discretionary funds, and whether these improve student outcomes. A $1,000 annual increase in foundation funding, or 10% increase in expenditures, yields a 0.1 s.d. increase in reading scores and a near 0.08 increase in math. In addition, dropout rates decline, graduation rates marginally increase, as does college enrollment and to a smaller degree graduation. These gains accrue in later grades and largely among poorer districts. An analysis of budget allocations reveals that additional funding only marginally affects budget shares.

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Carolyn Abott, Vladimir Kogan, Stéphane Lavertu, Zachary Peskowitz.

We use close tax elections to estimate the impact of school district funding increases on operational spending and education outcomes. The analysis indicates that districts where tax levies passed spent 3-5 percent more per pupil annually through 6-8 years after the election. This spending came in the form of higher salaries per employee—as opposed to more teachers or staff—and corresponds to positive achievement effects in districts with a high proportion of impoverished students. Specifically, among districts above the sample median in the proportion of students who qualify for free or reduced-price lunches, the results imply that spending an extra $700 per pupil annually for 6-8 years leads to achievement gains of approximately 0.06-0.08 standard deviations. We find no achievement effects in districts with relatively advantaged students, and there are no attainment effects regardless of district demographics.

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Emily Rauscher.

Contradictory evidence of the relationship between education funding and student achievement could reflect heterogeneous effects by revenue source or student characteristics. This study examines potential heterogeneous effects of a particular type of local revenue – bond funds for capital investments – on achievement by socioeconomic status. Comparing California school districts within a narrow window on either side of the cutoff of voter support required to pass a general obligation bond measure, this study uses dynamic regression discontinuity models to estimate effects of passing a bond on academic achievement among low- and high-SES students. Results consistently suggest that passing a bond measure increases achievement among low- but not high-SES students. However, these benefits for low-SES students are delayed and emerge 6 years after an election.

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Jing Liu, Susanna Loeb.

Teachers’ impact on student long-run success is only partially explained by their contributions to students’ short-run academic performance. For this study, we explore a second dimension of teacher effectiveness by creating measures of teachers’ contributions to student class-attendance. We find systematic variation in teacher effectiveness at reducing unexcused class absences at the middle and high school level. These differences across teachers are as stable as those for student achievement, but teacher effectiveness on attendance only weakly correlates with their effects on achievement. We link these measures of teacher effectiveness to students’ long-run outcomes. A high value-added to attendance teacher has a stronger impact on students’ likelihood of finishing high school than does a high value-added to achievement teacher. Moreover, high value-added to attendance teachers can motivate students to pursue higher academic goals as measured by Advanced Placement course taking. These positive effects are particularly salient for low-achieving and low-attendance students.

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Kenneth A. Shores, Christopher A. Candelaria, Sarah E. Kabourek.

Sixty-seven school finance reforms (SFRs) in 26 states have taken place since 1990; however, there is little empirical evidence on the heterogeneity of SFR effects. We provide a comprehensive description of how individual reforms affected resource allocation to low- and high-income districts within states, including both financial and non-financial outcomes. After summarizing the heterogeneity of individual SFR impacts, we then examine its correlates, identifying both policy and legislative/political factors. Taken together, this research aims to provide a rich description of variation in states’ responses to SFRs, as well as explanation of this heterogeneity as it relates to contextual factors.

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Eric Brunner, Joshua Hyman, Andrew Ju.

School finance reforms caused some of the most dramatic increases in intergovernmental aid from states to local governments in U.S. history. We examine whether teachers’ unions affected the fraction of reform-induced state aid that passed through to local spending and the allocation of these funds. Districts with strong teachers’ unions increased spending nearly dollar-for-dollar with state aid, and spent the funds primarily on teacher compensation. Districts with weak unions used aid primarily for property tax relief, and spent remaining funds on hiring new teachers. The greater expenditure increases in strong union districts led to larger increases in student achievement.

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